DEFINITION
A false presumption that two variables are correlated when in reality they are not. Spurious correlation is often a result of a third factor that is not apparent at the time of examination. Spurious comes from the Latin word spurious, which means illegitimate or false.INVESTOPEDIA EXPLAINS
According to the skirt length theory, many people believe that short skirts are used to predict that the markets are going up. And if skirt lengths are long, that it means the markets are going down. Some would argue that this is a spurious correlation and that each event occurs because of a random third variable such as warmerthanexpected weather or income levels.RELATED TERMS

Positive Correlation
A relationship between two variables in which both variables move in tandem. ... 
Stepwise Regression
The stepbystep iterative construction of a regression model that involves ... 
Super Bowl Indicator
An indicator based on the belief that a Super Bowl win for a team from the old ... 
Skirt Length Theory
The idea that skirt lengths are a predictor of the stock market direction. According ... 
Aspirin Count Theory
A market theory that states stock prices and aspirin production are inversely ... 
Correlation
In the world of finance, a statistical measure of how two securities move in ... 
Leading Lipstick Indicator
An indicator based on the theory that a consumer turns to less expensive indulgences, ... 
Presidential Election Cycle (Theory)
A theory developed by Yale Hirsch that states that U.S. stock markets are weakest ... 
Boston Snow Indicator
A market theory that states that a white Christmas in Boston will result in ... 
Compound Annual Growth Rate  CAGR
The yearoveryear growth rate of an investment over a specified period of time. ...
Related Articles

Options & Futures
Explaining The World Through Macroeconomic ...

Retirement
Economic Indicators To Know

Technical Indicators
What's the difference between Bollinger ...

Bonds & Fixed Income
Accelerating Returns With Continuous ...

Fundamental Analysis
Calculating Covariance For Stocks

Investing Basics
Seven Market Anomalies Investors Should ...

Investing Basics
What Are The Odds Of Scoring A Winning ...

Investing Basics
Regression Basics For Business Analysis

Investing Basics
Breaking Down The Geometric Mean

Active Trading Fundamentals
Tracking Volatility: How The VIX Is ...